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Sunday, January 08, 2012

Shaikin: Disney family to bid for Dodgers, sources say

Iwerks for the Dodgers and only the Dodgers!

The Disney name graced the last World Series champion in Southern California. The Disney name could grace the next World Series champion in town too, if Stanley Gold succeeds in his bid to buy the Dodgers.

The family of the late Roy Disney has partnered with Gold, entrusting the man who runs the family investment firm to lead the charge for the Dodgers and try to restore prominent local ownership to the team.

The partnership was disclosed Saturday by a person familiar with the bid but not authorized to discuss it. Neither Gold nor any member of Roy Disney’s family would comment Saturday, spokesman Terry Fahn said.

With a star-studded and deep-pocketed roster of bidders that could feature the likes of Magic Johnson, Joe Torre, Mark Cuban and Peter O’Malley, outgoing owner Frank McCourt appears to believe the Dodgers can sell for at least $1.6 billion.

Gold is in discussions with potential investors, according to two people familiar with the talks. Roy Disney, the nephew of Walt Disney, had a net worth of $1.4 billion in 2007, according to Forbes, before his divorce. The current net worth of the Roy Disney family is unclear.

Repoz Posted: January 08, 2012 at 11:59 AM | 29 comment(s) Login to Bookmark
  Tags: business, dodgers, media

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   1. Srul Itza At Home Posted: January 08, 2012 at 01:23 PM (#4031622)
From one Mickey Mouse operator to another.

/obvious

   2. TVerik - Dr. Velocity Posted: January 08, 2012 at 01:37 PM (#4031633)
Distinction from the article:

The Walt Disney Co. owned the Angels when they won the World Series in 2002, then sold the team the next year. The Roy Disney family would hold the Dodgers as a private investment.
   3. Swedish Chef Posted: January 08, 2012 at 02:03 PM (#4031659)
Well, this is goofy.
   4. Swoboda is freedom Posted: January 08, 2012 at 03:01 PM (#4031703)
Shaikin: Disney family to bid for Dodgers, sources say


Mr. Scrooge McDuck could not be reached for comment on his bid.
   5. Gonfalon Bubble Posted: January 08, 2012 at 03:15 PM (#4031717)
The wonderful thing about golddiggers?
Golddiggers are wonderful things!
Their checks are made out of rubber,
Their deals are loaded with strings!
   6. Tripon Posted: January 08, 2012 at 03:29 PM (#4031728)
Frank McCourt thinks he can get $1.6 billion for the sale of the Dodgers. Fox already offered $1.2 billion in a separate negotiation about the TV rights while McCourt countered $2 billion.

The ###### is going to get hundreds of millions of dollars out of this.
   7. valuearbitrageur Posted: January 08, 2012 at 03:36 PM (#4031737)
$1.6B sounds very optimistic. What is its reasonable expected cash flow? If the team was throwing off $100m a year in excess cash flow, McCourt wouldn't be in bankruptcy court. If its generating $50m in free cash flow, no buyer is dumb enough to pay 32x.
   8. Swedish Chef Posted: January 08, 2012 at 03:46 PM (#4031743)
If its generating $50m in free cash flow, no buyer is dumb enough to pay 32x.

They are due for a new TV deal, just remember the one that was supposed to solve all of Frank's problems. There's also the land that isn't visible in the cash flow.
   9. Joe Kehoskie Posted: January 08, 2012 at 04:20 PM (#4031761)
It's amazing how the Dodgers went from one bidder (McCourt) in the booming 2004 economy to a rumored 30-plus bidders in the struggling 2012 economy.

Also amazing is that there aren't any obvious publicity-seekers among the rumored bidders, which is common in MLB sales. A lot of these rumored groups won't have enough money, but they all seem to legitimately want the team.
   10. RoyalsRetro (AG#1F) Posted: January 08, 2012 at 04:29 PM (#4031766)
Will Walt be thawed out to throw out the first pitch?
   11. Swoboda is freedom Posted: January 08, 2012 at 04:58 PM (#4031779)
Will Walt be thawed out to throw out the first pitch?

Yes, and they will finally re-release "Song of the South".
   12. Javy Joan Baez (chris h.) Posted: January 08, 2012 at 04:59 PM (#4031780)
Will Walt be thawed out to throw out the first pitch?

Probably not. Imagine if he saw Kevin Youkilis. Do we need Walt throwing at players?
   13. TerpNats Posted: January 08, 2012 at 05:07 PM (#4031783)
OK, so it wouldn't be the same ownership group as last time, but based upon Disney's handling of the Angels, does anyone really want those folks back in MLB?
   14. Tripon Posted: January 08, 2012 at 05:19 PM (#4031794)
If it means cheerleaders in the stands, yes.
   15. Javy Joan Baez (chris h.) Posted: January 08, 2012 at 05:24 PM (#4031797)
OK, so it wouldn't be the same ownership group as last time, but based upon Disney's handling of the Angels, does anyone really want those folks back in MLB?

It's not the same folks at all, is it?
   16. valuearbitrageur Posted: January 08, 2012 at 05:28 PM (#4031801)
They are due for a new TV deal, just remember the one that was supposed to solve all of Frank's problems. There's also the land that isn't visible in the cash flow.


I have trouble believing its enough to support a $1.2B valuation, let alone $1.6B. Again, why wouldn't McCourt have sold/mortgaged the land to avoid BK, if it had substantial value.

The problem with the TV deal was its massive front loading (and McCourts attempt to divert a good amount outside of the team), the only reason it was so lengthy was to get big up front payments. If its not front loaded, what would Fox pay a year on a reasonable length deal? $75m?
   17. McCoy Posted: January 08, 2012 at 05:38 PM (#4031805)
Rangers got about 80 million a year and the Angels are believed to have gotten over 100 million a year for their deal. I'd say the Dodgers should be able to get more than 75 million a year.
   18. Joe Kehoskie Posted: January 08, 2012 at 06:01 PM (#4031818)
I have trouble believing its enough to support a $1.2B valuation, let alone $1.6B. Again, why wouldn't McCourt have sold/mortgaged the land to avoid BK, if it had substantial value.

I might be misremembering, but it seems like at the height of the real estate boom, some people were claiming the land surrounding Dodger Stadium was worth more than the team. There's no way that's true now, after the r.e. bust and with the huge increase in TV rights fees, but it's interesting how much the overall Dodgers portfolio has changed in less than 7 years.
   19. McCoy Posted: January 08, 2012 at 06:11 PM (#4031821)
Again, why wouldn't McCourt have sold/mortgaged the land to avoid BK, if it had substantial value.

Probably because he has already borrowed heavily against it.
   20. valuearbitrageur Posted: January 08, 2012 at 07:07 PM (#4031841)
Rangers got about 80 million a year and the Angels are believed to have gotten over 100 million a year for their deal. I'd say the Dodgers should be able to get more than 75 million a year.


This guy seems to think they are worth $100M per year. Since he was testifying for Fox, not sure if he was motivated to downplay their value or not (was Fox trying to show they were paying a fair price or that they would be damaged by losing the rights?). But this seems to imply that the Dodgers can't be operated profitably without the TV contract, because if the gate sales/parking could cover all the operating expenses (including player payroll) then the buyer would be getting $100M in FCF every year, and I can see someone paying up to $1.6B given the auction effect, and the willingness to overpay for sports franchises, esp. one as strong and historic as the dodgers.

But again, I'm suspicious whether this is really true. McCourt paid $480M 7 years ago, and Forbes valued the team at $800M a couple years ago, and if today's valuation is far in excess of $1B, why couldn't McCourt find an Einhorn to keep him solvent? The Dodgers nominally have $483M in debt, McCourt could have sold 49% of the team outright for $250M+ to pay off his wife, and have enough left to keep out of bankruptcy. Of course the MLB thinks his true debt load is approaching $600M, so that might be one answer, and his stubborn insistence on relying on the Fox deal might be another.

But even $600M in debt at 10% annual interest is only $60M per year. How did this guy end up in bankruptcy court?

If you could operate the team profitably without the TV contract money, it would be an interesting situation. Pay $1B, borrow $700M, and the TV contract would pay off the loan in 10 years (assuming 7% interest). Hire a Depodesta type, and tell him he's going to find a way to compete on a base $90m payroll (2nd biggest in the NL west).

And the excess TV cash flow over loan payments would be available for emergencies or opportunities. First year would be about $50M, by year 5 it would be $66M, if the contract never increased in value. But it will, by at least 4-5% per year, given population and inflation, so in 5 years that's another $20M a year, or $86M in excess cash flow to either pay down debt or increase payroll.

The first few years you'd want your GM to focus on building up the farm system and competing cost effectively, but as you cash flow grows, you'd allow Kim to increase the budget to add the right pieces.

You could put as little as $350M down, and 10 years later if the team should be worth $1.5B-$2B, with little debt remaining. Obviously this assumes the league allows you to use that much leverage, obviously you'd have to be the right kind of owner, no raiding team coffers for spending money, and significant assets outside of the Dodgers before they'd even think about it. But I'm pretty sure $500M in debt would no problem for the league or lenders, given team value/cash flow, so the right owner with the right plan should be able to get more.

   21. Joe Kehoskie Posted: January 08, 2012 at 07:28 PM (#4031855)
... why couldn't McCourt find an Einhorn to keep him solvent? [...] his stubborn insistence on relying on the Fox deal

Isn't the general consensus that McCourt could have found an Einhorn but waited too long to pursue one due to the latter (pursuing the Fox deal)?

Also, the scenario in #20 is compelling but doesn't include room for the projected $250 to $500 million in Dodger Stadium renovation costs.
   22. Javy Joan Baez (chris h.) Posted: January 08, 2012 at 09:49 PM (#4031920)
Also, the scenario in #20 is compelling but doesn't include room for the projected $250 to $500 million in Dodger Stadium renovation costs.

Yeah, but they'll just ignore that. Just ask the Ricketts family.
   23. RoyalsRetro (AG#1F) Posted: January 08, 2012 at 10:19 PM (#4031927)
OK, so it wouldn't be the same ownership group as last time, but based upon Disney's handling of the Angels, does anyone really want those folks back in MLB?

It's not the same folks at all, is it?


It's not. The Angels were owned by the Disney Corporation, who were run by CEO Michael Eisner. This is Stanley Gold, who runs the investments of the heirs of Roy Disney, Walt's nephew (and presumably the partnership includes those heirs).

According to the article, Gold tried to oust Eisner as CEO back in the day.
   24. Tripon Posted: January 09, 2012 at 02:06 AM (#4031978)
Yeah, Gold and Roy Disney succeeded at getting Eisner out as CEO, and after a 'search', installed Robert Iger as CEO, a Disney insider that worked up the ranks.

If you believe the ESPN employees who worked under both Eisner, and Iger, Eisner is a buffoon that is incredbility willing to take credit whenever there is to be had, and Robert Iger is the ultimate ass kisser and yes man.
   25. zachtoma Posted: January 09, 2012 at 02:47 AM (#4031989)
I for one would like to see their kids' pajama-style update of the Dodgers' classy look.
   26. Rowland Office Supplies Posted: January 09, 2012 at 10:28 AM (#4032088)
"I didn't say they were crazy...I said they were owned by Goofy!"
   27. RoyalsRetro (AG#1F) Posted: January 09, 2012 at 10:31 AM (#4032090)

If you believe the ESPN employees who worked under both Eisner, and Iger, Eisner is a buffoon that is incredbility willing to take credit whenever there is to be had, and Robert Iger is the ultimate ass kisser and yes man.


So both were perfect fits for ESPN?
   28. Tom Goes to the Ballpark Posted: January 09, 2012 at 01:13 PM (#4032211)
It's amazing how the Dodgers went from one bidder (McCourt) in the booming 2004 economy to a rumored 30-plus bidders in the struggling 2012 economy.


Not really. There were a number of other interested parties, but News Corp stuck the team with a pretty brutal TV deal. There were only two parties that were seriously interested on News Corp's crappy terms (McCourt and Malcolm Glazer).

The new TV contract is going to be huge. McCourt's deal, that everyone seems to feel is undervalue due to the up front cash payment, was for $150 million per year(AAV). The speculation is that is somewhere between $50-100 million per year less than what could be expected in a competitive bidding between Fox Sports and Time Warner.
   29. Joe Kehoskie Posted: January 09, 2012 at 02:32 PM (#4032308)
Not really. There were a number of other interested parties, but News Corp stuck the team with a pretty brutal TV deal. There were only two parties that were seriously interested on News Corp's crappy terms (McCourt and Malcolm Glazer).

Perhaps, but it's hard to see McCourt's new, $1.5 billion terms as being so much better as to explain the 15 times more bidders he has now than Fox had in 2004, especially when comparing the economies of then and now. Also, at the ~$480M price McCourt paid, it's possible the team could have been treated as an afterthought by an r.e.-savvy buyer given the huge value of Chavez Ravine during the real estate boom. Even today, after the r.e. bust, I'm reading estimates of the land being worth $400M or more.

Looking at it another way, McCourt wouldn't have been able to leverage the team to the tune of an estimated $700M to $800M if the team wasn't substantially undervalued at the 2004 sale price.

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